Value-Added Tax (VAT) is a critical part of running a business in South Africa. Whether you’re a small business owner or managing a large enterprise, understanding VAT submission deadlines is essential to avoid penalties and stay compliant with SARS (South African Revenue Service).
We’ll break down everything you need to know about VAT submission deadlines, including how to calculate your VAT period, what happens if you miss a deadline, and tips to stay on track.
What is VAT and Who Needs to Submit?
VAT is a consumption tax levied on the value added to goods and services at each stage of production or distribution. In South Africa, businesses with a taxable turnover of R1 million or more in a 12-month period are required to register for VAT.
Once registered, you must charge VAT on taxable supplies, claim input VAT on business expenses, and submit regular VAT returns to SARS.
Understanding VAT Submission Deadlines
Your VAT submission deadlines depend on your VAT category, which is determined by your business’s turnover. SARS assigns businesses to one of four categories:
1. Category A: Monthly VAT Submissions
- Who it applies to: Businesses with a taxable turnover of R30 million or more per year.
- Deadline: VAT returns and payments are due by the 25th day of the month following the tax period.
2. Category B: Bi-Monthly VAT Submissions
- Who it applies to: Businesses with a taxable turnover of less than R30 million per year.
- Deadline: VAT returns and payments are due by the 25th day of the month following the end of the two-month tax period.
3. Category C: Six-Monthly VAT Submissions
- Who it applies to: Farmers and other businesses specifically approved by SARS.
- Deadline: VAT returns and payments are due by the 25th day of the month following the end of the six-month tax period.
4. Category D: Annual VAT Submissions
- Who it applies to: Micro businesses with a taxable turnover of less than R1.5 million per year.
- Deadline: VAT returns and payments are due by the 25th day of the month following the end of the annual tax period.
Here is the table based on the provided information about VAT submission deadlines in South Africa:
Category | Who it Applies To | Tax Period | Submission Deadline |
---|---|---|---|
Category A | Businesses with a taxable turnover of R30 million or more per year | Monthly | 25th day of the month following the tax period |
Category B | Businesses with a taxable turnover of less than R30 million per year | Bi-monthly (every two months) | 25th day of the month following the end of the two-month tax period |
Category C | Farmers and other businesses specifically approved by SARS | Six-monthly | 25th day of the month following the end of the six-month tax period |
Category D | Micro businesses with a taxable turnover of less than R1.5 million per year | Annually | 25th day of the month following the end of the annual tax period |
How to Calculate Your VAT Period
Your VAT period is the timeframe for which you must calculate and submit your VAT return. Here’s how to determine it:
- Check your VAT registration certificate. SARS will specify your VAT category and submission frequency when you register.
- Mark your calendar. Use the deadlines above to plan for submissions.
- Set reminders. Use digital tools or payroll software to alert you ahead of deadlines.
What Happens If You Miss a Deadline?
Missing a VAT submission deadline can result in penalties and interest charges. Here’s what you need to know:
1. Late Submission Penalties
- SARS imposes a fixed penalty for late submissions, regardless of the amount owed.
- The penalty increases the longer you delay.
2. Late Payment Interest
- If you submit your return on time but fail to pay the VAT due, SARS will charge interest on the outstanding amount.
- The interest rate is determined by SARS and is subject to change.
3. Audit Risk
- Consistently missing deadlines can flag your business for a SARS audit, which can be time-consuming and stressful.
Tips to Stay Compliant with VAT Deadlines
- Use SARS eFiling
- SARS eFiling is a convenient online platform for submitting VAT returns and making payments. It also provides reminders for upcoming deadlines.
- Automate Your VAT Calculations
- Invest in accounting or payroll software that automatically calculates VAT and generates returns.
- Keep Accurate Records
- Maintain detailed records of all taxable supplies, input VAT, and expenses. This will make it easier to complete your VAT returns.
- Set Internal Deadlines
- Aim to complete your VAT return a few days before the official deadline to avoid last-minute issues.
- Consult a Tax Professional
- If you’re unsure about your VAT obligations, seek advice from a tax consultant or accountant.
Common VAT Submission Mistakes to Avoid
When handling VAT submissions, it’s crucial to be meticulous and well-informed to avoid costly mistakes. Here are some common pitfalls and how to steer clear of them:
- Incorrect VAT Calculations:
- Why It Happens: Miscalculations often arise from misunderstanding VAT rates or incorrectly applying them to different transactions.
- How to Prevent It: Use VAT calculation tools or software to ensure accuracy. For example, if you’re selling a product for R1,200 inclusive of 15% VAT, the VAT amount should be R150 (15% of R1,000), not 15% of R1,200.
- Tip: Regularly review your calculations and consider having a second pair of eyes check them before submission.
- Failing to Claim Input VAT:
- Why It Happens: This often occurs due to poor record-keeping or misunderstanding what qualifies as input VAT.
- How to Prevent It: Maintain detailed records of all business expenses and ensure you’re claiming input VAT on eligible purchases. For instance, office supplies, utilities, and professional services often qualify.
- Tip: Use accounting software to track input VAT automatically and ensure nothing is overlooked.
- Ignoring SARS Notifications:
- Why It Happens: Notifications can be easy to overlook, especially if they are buried in a busy inbox or mistaken for spam.
- How to Prevent It: Set up a dedicated email for SARS communications and check it regularly. Treat all notifications as urgent and address them promptly.
- Tip: Consider setting up email filters to highlight SARS communications so they don’t get lost in your inbox.
- Mixing Personal and Business Expenses:
- Why It Happens: This can occur when financial boundaries are unclear, especially in small businesses or startups.
- How to Prevent It: Use separate bank accounts for personal and business transactions. Clearly label expenses and avoid using business funds for personal purposes.
- Tip: Implement a strict policy for expense reporting and review all transactions before submitting VAT returns.
- Misunderstanding Taxable and Non-Taxable Supplies:
- Why It Happens: The distinction between taxable and non-taxable supplies isn’t always straightforward, leading to errors in classification.
- How to Prevent It: Familiarize yourself with South African VAT laws to understand which supplies are taxable. For example, basic food items are zero-rated, while luxury goods are fully taxable.
- Tip: Consult the SARS VAT guide or a tax professional to ensure correct classification of your supplies.
- Overlooking VAT Exemptions or Zero-Rating:
- Why It Happens: Businesses may not be aware of all exemptions or zero-rating provisions, leading to overpayment of VAT.
- How to Prevent It: Stay informed about VAT exemptions and zero-rating rules. For instance, exports to non-MOU countries are typically zero-rated.
- Tip: Regularly review your business operations to identify any eligible exemptions or zero-rated supplies.
- Failing to File VAT Returns on Time:
- Why It Happens: Even if there’s no VAT to pay, failing to file returns on time can result in penalties.
- How to Prevent It: Set up reminders for VAT return deadlines and ensure submissions are made well before the due date.
- Tip: Use SARS eFiling for easy and timely submissions, and consider setting up automatic reminders in your calendar.
- Not Keeping Up with VAT Law Changes:
- Why It Happens: VAT regulations can change, and businesses that don’t stay updated may fall into non-compliance.
- How to Prevent It: Regularly check SARS updates and consider subscribing to tax newsletters or following SARS on social media for the latest information.
- Tip: Attend tax seminars or webinars to stay informed about changes in VAT laws and regulations.
By being aware of these common mistakes and taking proactive steps to avoid them, businesses can ensure smooth and compliant VAT submissions, saving time and avoiding unnecessary penalties.
Example: VAT Submission Timeline
Let’s say you run a small business with a taxable turnover of R2 million per year. SARS assigns you to Category B (bi-monthly submissions).
- VAT Period: January to February
- Deadline: 25 March
Here’s what your timeline looks like:
- 1–28 February: Record all sales, purchases, and VAT amounts.
- 1–15 March: Reconcile your accounts and calculate your VAT liability.
- 16–24 March: Submit your VAT return via SARS eFiling and make the payment.
- 25 March: Deadline met!
Key Takeaways
- Know your VAT category and submission frequency.
- Mark your deadlines and set reminders to avoid penalties.
- Use technology to automate calculations and submissions.
- Keep accurate records to simplify the process.
Final Thoughts on VAT Submission Deadlines
Staying on top of VAT submission deadlines doesn’t have to be stressful. With the right tools, systems, and knowledge, you can ensure compliance and focus on growing your business.
If you’re ever in doubt, don’t hesitate to reach out to Thrive CFO for guidance.